During June, Delilah, a black lab, was hit by a self-driving car. Happily, the dog was unharmed. Next though, within 10 minutes, a Cruise representative arrived with insurance information. Called, “Handout For Others Involved In An Incident With Cruise.” the document reflected what happens when there is no driver to talk to.
The incident also signaled the impact of self-driving vehicles.
McKinsey categorized the different kinds of AVs (autonomous vehicles):
The Impact of Self-Driving Cars
In 1897, the first U.S. driver received auto insurance. The policy established that drivers have to protect themselves against risk. Now though, we have no driver. As a result, the insurer could be the software developer or an equipment manufacturer. Furthermore, no longer based on the driver’s age or safety record, the metrics on which premiums are determined will change.
In the following video, Malcolm Gladwell suggests that AVs will transform pedestrian attitudes as worry about unsafe drivers disappears:
Our Bottom Line: Unintended Consequences
Sam Peltzman was one of the first economists to suggest that safety regulations can make us less safe. The Peltzman Effect predicts that less risk creates the incentive for more unsafe behavior. As a result, when solving a safety problem, you can wind up with the results you are trying to prevent.
We can explain the Peltzman Effect (also called the offset hypothesis) by looking at unintended consequences. With statins we reduce some of our safety for more delicious food, with anti-lock brakes, it’s faster trips, and for vaccines, we might exchange some safety for risky behavior.
Similarly, the autonomous vehicles that eliminate human error could encourage pedestrians to take more chances. They are but another example of the unintended consequences we can surely expect from AVs.
My sources and more: After seeing how WSJ looked at the proliferation of self-driving cars in San Francisco, we then returned to this past econlife post. From there, we discovered these insurance changes through Medium and wound up with the Peltzman Effect.
Please note that several of today’s sentences about Sam Peltzman were in a past econlife post.